EXHIBIT 10.11
AMERICA ONLINE LATIN AMERICA, INC.
0000 X. Xxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, XX 00000
As of September 24, 2002
Xxxxxx Broadcasting System Latin America, Inc.
000 Xxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Re: Amendment of Memorandum of Agreement
Ladies and Gentlemen:
This letter ("Amendment Letter") confirms the agreement between America
Online Latin America, Inc. ("AOLA") and Xxxxxx Broadcasting System Latin
America, Inc. ("Xxxxxx") to amend that certain Memorandum of Agreement, dated as
of June 6, 2000, between AOLA and Xxxxxx (the "MOA"). AOLA and Xxxxxx may be
referred to herein individually as a "Party" and together as the "Parties."
Capitalized terms used herein but not otherwise defined shall have the meaning
given such terms in the MOA.
AOLA and Xxxxxx hereby agree as follows:
1. Sections 2 and 3. The Parties agree that from the date hereof
through December 31, 2002 (the "Original Termination Date"), they shall each
negotiate in good faith to amend the economic and programming elements of
Sections 2 and 3 of the MOA and to extend the effectiveness of such Sections (as
modified by the Parties) through the Amended Termination Date (as defined
below). In the event the Parties are unable to agree on such modifications
within the period specified, Sections 2 and 3 of the MOA shall terminate as of
the Original Termination Date, as provided for under paragraph 3 below. Any
agreement between the Parties with respect to extension and modification of
Sections 2 and 3 would be set forth in a separate amendment to the MOA.
2. Section 4(a). Xxxxxx acknowledges and agrees that as of the
date hereof AOLA and its affiliates have purchased a total of US$1,514,000 in
advertising from Xxxxxx Properties in Latin America. The Parties agree that the
obligations of the Parties under Section 4(a) of the MOA shall be modified as
follows:
(a) The balance of AOLA's US$3,000,000 purchase commitment, which
as of the date hereof is equal to US$1,486,000 shall be paid
by AOLA to Xxxxxx in accordance with the following schedule:
US$495,333 on or before September 30, US$495,333 on or before
October 15, 2002 and US$495,333 on or before December 1, 2002.
(b) AOLA will have the right to apply the amounts paid under
paragraph (a) above toward the purchase of advertising on
Xxxxxx Properties in Latin America from the date hereof
through the Amended Termination Date (as defined below). Such
purchases shall be made in accordance with the following
chart, subject to permitted country/date variances of +/-5%.
(Amounts in Chart in US$000's other than Split which is in %)
AOLA Investments in Xxxxxx ($K) 2002 2003 2004 Total
------------------------------- ------- ------ ----- ------
Brazil 275.8 275.8 191.4 743.0
Mexico 275.8 275.8 191.4 743.0
Argentina 0.0 0.0 0.0 0.0
Total Latin America 551.6 551.6 382.8 1486.0
------------------------------- ------ ----- ----- ------
Split(%) 37.1 41.6 21.3 100.0
=============================== ====== ===== ===== ======
The rates charged to AOLA for the above purchases shall be the
preferred rates established in Section 4(a) of the MOA. The
value of the advertising purchased by AOLA shall be calculated
on a monthly, country-by-country basis by taking the total
cost in local currency of the advertisements delivered in a
particular country in a particular month and converting the
total cost into US Dollars at the average exchange rate
reported in the Currency Exchange rate table in the Wall
Street Journal (eastern edition) during the applicable month.
(c) In addition to the advertising provided for under paragraph
(b) above, Xxxxxx shall provide to AOLA additional advertising
at no cost to AOLA in an amount equal to no less than
US$490,380 ("Bonus Advertising"). The Bonus Advertising shall
be used by AOLA solely for running direct response commercials
which shall include a toll-free phone number for viewers to
call and register for an AOLA Service. The rates applied to
the Bonus Advertising shall be the preferred rates established
in Section 4(a) of the MOA. Xxxxxx shall determine at what
times and on what Xxxxxx Properties in Latin America the Bonus
Advertising will be delivered; provided, that the Bonus
Advertising may not be delivered during between the hours of
12:01AM and 6:00AM, unless otherwise approved by AOLA. Bonus
Advertising up to US$490,380 shall be delivered over the same
time frame and in substantially the same proportions as the
advertising covered under paragraph (b) above; provided,
however, that in the event Xxxxxx has insufficient advertising
inventory to deliver such Bonus Advertising within the
specified time frame, Xxxxxx shall be given up to an
additional six (6) months to deliver such Bonus Advertising.
Bonus Advertising in excess of US$490,380, shall be delivered
over the time frame and in such countries as determined by
Xxxxxx in its sole discretion; provided that such Bonus
Advertising must be delivered during the Term and within one
of the countries specified in paragraph (b) above.
Notwithstanding the foregoing, AOLA shall have the right to
require that Xxxxxx discontinue the delivery of Bonus
Advertising in a particular country in the event that the AOLA
Service in such country ceases or substantially discontinues
it operations in such country. AOLA will obtain a special
toll-free phone for purposes of tracking the number of New
Members (as defined below) generated pursuant to the Bonus
Advertising.
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(d) AOLA's applicable local affiliate will pay Xxxxxx'x applicable
local affiliate a one-time fee (as specified in the chart
below) for each for each New Member(1) acquired through the
Bonus Advertising.
-------------------- -------------------------------------- ---------------------------------------
PAYMENT FOR QUALIFIED PAYMENT FOR QUALIFIED
AOLA UNLIMITED HOURS MEMBER(2) ARGENTINA UNBUNDLED MEMBER(3)
SERVICE
-------------------- -------------------------------------- ---------------------------------------
Brazil 50 Brazilian Reais N/A
-------------------- -------------------------------------- ---------------------------------------
Mexico 200 Mexican Pesos N/A
-------------------- -------------------------------------- ---------------------------------------
Argentina 50 Argentine Pesos 50 Argentine Pesos
-------------------- -------------------------------------- ---------------------------------------
The amounts payable to Xxxxxx'x local affiliates hereunder
shall at no time be less than the amounts payable by AOLA's
applicable local affiliates to other marketing partners for
Qualified Unlimited Hours Members and Qualified Argentina
Unbundled Members acquired through the broadcast of direct
response commercials on cable television channels on
substantially the same terms as those set forth in this
Amendment Letter. For the avoidance of doubt, the foregoing
sentence shall not apply to any marketing partner incurring
additional costs or to commercials run on broadcast television
channels. AOLA's local affiliates shall pay the amounts
provided for in this paragraph (d) to Xxxxxx'x local
affiliates on a quarterly basis, within thirty (30) calendar
days of their receipt of an invoice therefor from the
applicable Xxxxxx local affiliate. After expiration or
termination of this Agreement, AOLA's local affiliates will
continue to make payments to Xxxxxx hereunder with respect to
registrations which occur within ten (10) calendar days after
the date on which the last of the Bonus Advertising is
delivered in the applicable territory; provided, however, that
if the MOA is terminated by AOLA pursuant to Section 11 of the
MOA as a result of a breach of the MOA by Xxxxxx, AOLA's local
affiliates shall not have the obligation to pay such bounty
fees after such termination date. AOLA shall provide Xxxxxx
with quarterly reports no later than fifteen (15) calendar
days after the end of each quarter setting forth in reasonable
detail the payments which accrued under this paragraph (d)
during the preceding quarter, and the basis upon which such
amounts were calculated by AOLA. Xxxxxx shall provide AOLA
with monthly reports no later than fifteen (15) calendar days
after the end of each month setting forth in reasonable detail
the dates, times and channels on which the Bonus Advertising
was broadcast during the preceding month and forecasts
regarding the dates, times and channels on which the Bonus
Advertising will be broadcast in the current month. Xxxxxx
agrees that AOLA shall have the right at any time and at its
sole discretion to change or discontinue the pricing plans
offered to members of the AOLA Services; provided that no
------------------
1 "New Member" shall mean a Qualified Unlimited Hours Member or a Qualified
Argentina Unbundled Member.
2 "Qualified Unlimited Hours Member" shall mean any person or entity who
registers for an AOLA Service in Brazil, Mexico or Argentina pursuant to the
Bonus Advertising and who pays on a timely basis the then-standard full retail
price required for premium unlimited hours membership to such service through at
least two (2) consecutive billing cycles after any billing cycles where such
person or entity was not responsible for paying for the service.
3 "Qualified Argentina Unbundled Member" shall mean any person or entity who
registers for the AOLA Service in Argentina pursuant to the Bonus Advertising
and who pays on a timely basis the then-standard full retail price required for
unlimited hours (without customer service) membership to such service through at
least four (4) consecutive billing cycles after any billing cycles where such
person or entity was not responsible for paying for the service.
-3-
AOLA Service may discontinue offering its premium unlimited
hours membership unless such Service ceases operations.
3. Section 5. The Parties agree that Section 5 of the MOA shall
be amended to provide that the MOA will expire on December 31,
2004 (the "Amended Termination Date"); provided that Sections
2, 3 and 4(b) through 4(f) of the MOA shall terminate as of
the Original Termination Date (as defined in paragraph 1
above). The foregoing amendment shall not relieve either Party
from fulfilling their respective obligations under Sections 2,
3 and 4(b) through 4(f) of the MOA on or before the Original
Termination Date.
4. Order of Precedence. This Amendment Letter is supplementary to
and modifies the MOA. The terms of this Amendment Letter
supersede provisions in the MOA only to the extent that the
terms of this Amendment Letter and the MOA expressly conflict.
Nothing in this Amendment Letter should be interpreted as
invalidating the MOA generally, and provisions of the MOA will
continue to govern relations between the parties insofar as
they do not expressly conflict with this Amendment Letter.
5. Counterparts. This Amendment Letter may be executed in any
number of counterparts, each of which shall be deemed an
original. Delivery of executed signature pages hereof
by facsimile transmission shall constitute effective
and binding execution and delivery hereof.
If this Amendment Letter accurately sets forth your understanding of
our agreement, please indicate such agreement by signing a copy of this letter
where indicated below and returning a copy of the same to me.
AMERICA ONLINE LATIN AMERICA, INC.
By: /s/ Xxxxxxx Xxxxxx
----------------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
ACKNOWLEDGED AND AGREED:
XXXXXX BROADCASTING SYSTEM LATIN AMERICA, INC.
By: /s/ Xxxx Xxxxxx Xxxxxxxx
----------------------------------------
Name: Xxxx Xxxxxx Xxxxxxxx
Title: President
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